Trees, plants, and flowers: What's taxable?

Now that winter has finally released its frosty grip from the land, Americans are heading to garden centers, nurseries, greenhouses, and home improvement stores to stock up on plants, flowers, vegetables, trees, and shrubs.

More than 90 million U.S. households participate in do-it-yourself lawn care and gardening. According to a recent study by the National Gardening Association, spending on lawns and gardens reached $36.1 billion in 2015, with the average household spending approximately $400 on gardening supplies. Although the groups with the highest gardening participation included baby boomer and married households, Millennials (people aged 18 to 34) represented the fastest growing group, as five million of the six million new gardening households were Millennials.

If you’re an ecommerce retailer of gardening supplies looking to take advantage of this burgeoning industry, it can be confusing to figure out what types of products are taxable and which are exempt from sales tax in each state.

Although there are exceptions to the rule, plants and seeds that are used for human consumption, including vegetables, herbs, and fruits, are generally exempt from sales tax in most states, including California, Texas, Massachusetts, Rhode Island, Arizona, and Florida. On the other hand, ornamental plants and flowers, as well as trees, are usually subject to the sales tax.

However, as mentioned, this is not the case in all states. For example, New York, Minnesota, and Maine tax the sales on all plants and seeds for non-commercial use, regardless of whether they are for human consumption or not.

To make matters trickier, many states have caveats regarding the taxation of certain plants and trees. For example, in California, since dates ordinarily constitute food for human consumption, the sale of palm trees that produce edible dates are exempt from sales tax even if sold for landscaping or ornamental purposes. But this tax exemption does not apply to fruitless palm trees or palm trees that produce inedible types of fruit. In addition, the sale of eucalyptus tree seedlings is exempt from tax if the purchaser grows them for wood fuel purposes only.

In Texas, seeds for annual and perennial plants used for human consumption are both exempt from tax. However, while the sale of an annual plant or seedling that is used for human consumption, such as a tomato, corn, lettuce, and pea plant, is exempt from sales tax, the sale of perennial plants, including plants that produce food for humans, are subject to sales tax. These types of plants include blueberry bushes and grape vines, as well as strawberry, raspberry, and blackberry plants.

In Minnesota, sales of plants and seeds used for home vegetable gardens, lawns, or flowerbeds are taxable. But tree seedlings purchased for use as windbreaks (linear plantings of trees between crop fields designed to reduce wind speed and prevent soil erosion and wind damage to crops) are tax-exempt.

Here are a few additional interesting sales tax facts for sellers of gardening supplies:

• Guess I’ll eat some worms: In California, while natural and chemical fertilizers are exempt from sales tax, the sale of earthworms for the purpose of improving soil quality is taxable.
• Sometimes you feel like a nut: In Texas, trees, including nut, fruit, and ornamental varietals, are taxable.
• An apple a day: In Colorado, orchard trees are exempt from state and local sales tax. All other kinds of trees are subject to sales tax.

Luckily, one thing that's never taxable is your green thumb.

Learn how automating sales tax compliance can help improve it.